Financial Stability
Carney: BoE ‘nowhere near’ exhausting macropru tools
Governor says Bank of England has ‘some way to run’ in terms of both the number of tools and options for calibration; debates debt levels on panel at Bundesbank conference
NY Fed wants ‘enhanced communication’ around cyber threats
Sarah Dahlgren says the New York Fed is interested in learning from breaches in security elsewhere and using the intelligence to ‘get ahead of the game’
BIS paper finds macro-prudential impact varies during cycle
Working paper finds evidence tightening policy is more effective than loosening it, and has a greater impact when credit has been expanding quickly
BoE calls for investigation into market liquidity risks
Financial policy committee concerned that investors assume liquidity will be available when they need it, despite recent fragility; BIS research highlights paradox in liquidity buffers
UK payments regulator set for launch
PSR outlines its approach ready for start of regulation on April 1, including plans to work more closely with the industry, increase transparency and boost competition
Investigation unearths flaws in BoE’s RTGS system
Combination of elderly and complex RTGS system, inadequate testing and poor contingency planning led to nine-hour outage last October; BoE adopting review’s recommendations in full
Irish deputy encouraged by NPL progress
Cyril Roux says banks have improved their distressed debt operations but warns it will take several years to work though the stock of commercial NPLs still outstanding
Colombian paper considers reaction functions in payments
Working paper examines how different entities within a large-value payment system react to failures within that system, finding that a range of factors are in play
RBA alert to ongoing housing risks
Financial stability review shows the Reserve Bank of Australia is still concerned about investor demand in the market; says it is ‘too early’ to judge impact of APRA measures
India to become netting friendly on bankruptcy law reform
Different treatment of public and private banks stymied netting - but this could now change
Visual interfaces ‘hold promise’ for policy-makers
Working paper published by ECB finds ‘analytical visualisations and interactive interfaces’ can help with the communication of risks; presents macro-prudential data cube
ECB closely watching impact of QE on financial stability
Mario Draghi tells Econ committee the central bank is aware of the potential for QE to inflate asset prices and invite excessive risk taking, but risks are ‘contained’ at present
Central banks told to handle financial inclusion with care
Greater inclusion benefits the poor but could damage monetary policy or financial stability if it is not kept under control, BIS research and IMF officials warn
Lockhart backs ‘selective’ regulation of shadow banks
Atlanta Fed president argues for US authorities to ‘variably monitor and supervise’ all institutions with implications for financial stability, regardless of whether they are shadow banks
RBA research suggests options for IMF to overcome governance issues
Analysis of constraints on IMF actions suggests seeking backup from other international organisations could add to political clout, but quota reform remains a problem
EBA proposes curbs on shadow bank exposures
Financial institutions will be expected to set their own limits, except in cases where information or internal processes are lacking; ‘fallback’ option may need adjusting, EBA admits
Hellwig and Wolf question efficacy of financial reforms
Martin Hellwig and Martin Wolf discuss flaws in financial reforms aimed at breaking the sovereign-bank linkage in book on country and political risk
ECB paper emphasises importance of time horizons for early-warning models
Working paper finds the selection of a particular time horizon can have ‘considerable implications’ for the performance of economic variables in predicting bank crises
Banks could face fines of $4bn from US DoJ
The fines being hammered out would nearly double the total already paid to regulators during the currency probe
BIS charts ‘boundaries of the unthinkable’ as risks rise
Quarterly review flags growing vulnerabilities and signs of credit booms in some economies; research finds limited impact of deflation on growth, pointing to importance of financial sector
IMF paper warns against ‘overburdening’ LatAm central banks
Working paper studies evolution of central banks in Latin America, and warns against jeopardising the credibility they currently enjoy by handing them new mandates
BoE’s Brazier sees room for improvement in stress testing
New executive director outlines enhancements including counter-cyclical testing and extending the regime to the non-bank sector
Gradual rollout for China's payment system
The country’s cross-border interbank payment system will further contribute to the internationalisation of the renminbi
Paper examines role of capital in BHC lending decisions
Authors find an increase in capital requirements of bank holding companies is ‘likely’ to increase the interest rate charged on loans, resulting in a ‘significant’ reduction in lending